Global Logistics Management

This second edition of Global Logistics Management has been thoroughly revised and updated, and new examples have been added reflecting recent developments in the field. This new edition:

• 
  
• Helps readers to understand and appreciate the power of managing logistics for profit and competitive advantage
  
• Educates readers about the nature of individual logistics activities and how they can be woven together
  
• Contains a global focus throughout, with examples drawn from various parts of the world
  
• Has been thoroughly revised and updated throughout to keep it current
  
• Now includes new examples reflecting recent developments and current preoccupations, including security and global instability.

Visit the accompanying website at www.blackwellpublishing.com/gourdin to download PowerPoint slides to supplement the book.

Preface xiii

Acknowledgments xv

1 Introduction to Logistics 1

Logistics: The Historical Perspective 1

Logistics: The Modern Perspective 2

Components of a logistics system 4

The role of logistics in the organization 7

Logistics as a Source of Competitive Advantage 8

Why Is Management Interest in Logistics Growing? 10

Trends in global trade 10

Customers are demanding greater value 10

Transportation privatization and liberalization 11

Transportation security 12

Environmental concerns 12

Changing view of inventory 13

Continuing advances in information technology 14

Electronic commerce 15

Logistics in the Global Organization 15

Conceptual Model and Statement of Purpose 17

Chapter Summary 18

Study Questions 19

2 Logistics in the Organization 21

Introduction 21

The Marketing/Logistics Partnership 22

Marketing and Logistics Channels 22

Alternative channel structures 22

Why do channels develop? 23

Channel flows 23

Designing effective channels 25

Environmental Issues 25

Marketing Issues 26

Channel management issues 31

Formal and informal channel relationships 32

Domestic versus global channels 33

Future trends in channel structures 35

Managing the Logistics System 36

Tradeoff Analysis 37

Enhancing Corporate Profitability with Logistics 39

Chapter Summary 41

Study Questions 42

3 Customer Service 44

Introduction 44

What Is Customer Service? 45

Elements of Customer Service 45

Customer Service in a Global Setting 49

How Much Service Should Be Offered? 50

Barriers to Quality Customer Service 52

Controllable factors 52

Uncontrollable factors 53

Improving Customer Service Performance 54

The Consequences of Poor Customer Service 55

Improving Customer Service in Comparison to its Costs 59

Customer Service and the Internal Customer 59

Chapter Summary 60

Study Questions 60

4 Inventory Management 62

Introduction 62

Inventory and Customer Service 63

Purposes of Inventory 64

Types of Inventory 64

Objectives of Inventory Management 65

Inventory costs 65

Managing inventory costs 66

Classic Inventory Models 66

Economic order quantity (EOQ) model 66

Modifications to the basic EOQ model 67

Model limitations 68

Fixed order point/fixed order quantity model 68

Fixed order interval model 68

Safety stock requirements 70

Inventory Management: Signs of Trouble 71

Improving Inventory Management 74

Materials Requirements Planning (MRP) 77

Distribution Resource Planning (DRP) 77

Just-In-Time (JIT) Inventory Management 77

Basic tenets of JIT 78

Advantages of JIT 79

Disadvantages of JIT 79

JIT II/vendor managed inventory (VMI) 80

The reality of JIT 81

Integrated Inventory Management: DRP, MRP, and JIT 82

Inventory Management in a Global Market 83

Chapter Summary 85

Study Questions 86

5 Global Transportation Systems 87

Introduction 87

The Five Modes of Transportation 88

Rail 89

Road transport 91

Pipelines 93

Air 93

Water carriage 94

Deregulation and Privatization of Transportation 97

Deregulation 97

Privatization 98

Future directions 99

Government’s Role in Transportation 100

Direct control and regulation of transport firms 100

Provision of transport infrastructure 101

Promulgating and enforcing environmental, safety, and security laws 101

Transportation Security 102

Intermodal Transportation 103

Rail 104

Ocean transport 104

Air 105

Motor transport 105

Infrastructure issues 106

Concluding comments 106

Chapter Summary 106

Study Questions 107

6 Transportation Management Issues 109

Introduction 109

Developing Win/Win Shipper/Carrier Relationships 109

Transport Pricing 111

Market structure models 111

Relevant market area 112

Shipper demand 113

Carrier costs 113

Pricing in Practice 115

Price negotiation: the carrier’s perspective 115

Price negotiation: the shipper’s perspective 116

Private Transportation 116

Other Issues Affecting Transportation Cost and Service 117

Infrastructure availability and condition 117

Environmental and quality of life issues 121

Customs and cargo security 125

Carrier safety 125

Conclusions 126

Chapter Summary 126

Study Questions 127

7 Warehousing 129

Introduction 129

The Strategic Role of Warehousing in Logistics 131

Functions of Warehousing 132

Warehouse Roles 134

Warehouse Location Issues 135

Centralized versus decentralized warehouses 135

Selecting specific sites 137

Warehousing Alternatives 139

Private warehousing 139

Contract warehousing 139

Public warehouses 139

Warehousing Strategies 140

Warehousing Concerns in Overseas Markets 141

Chapter Summary 143

Study Questions 143

8 Materials Handling and Packaging 145

Introduction 145

Basic Warehouse Design 145

Manual Versus Automated Materials Handling Systems 146

Manual warehouses 146

Automated warehouses 147

Manual versus automated: making the choice 147

Trends in Materials Handling 150

Reliability 150

Total integration 151

Flexibility and modularity 151

Upgradeability 151

Automated identification 152

Ease of use 155

Maintainability 155

Conclusions 155

Product Packaging 156

Types of packaging 156

Organizational influences on packaging 156

The role of packaging 157

Logistics packaging materials 157

Environmental issues 158

Packaging for global markets 159

Bar coding 160

Developments in packaging 161

Tradeoffs with other components of the logistics system 161

Chapter Summary 163

Study Questions 163

9 Managing Logistics Information 166

Introduction 166

The Order Processing System 167

Logistics Information Systems 168

Environmental scanning 169

LIS and information management 169

Forecasting Methods 170

Qualitative forecasts 170

Time-series methods 170

Causal methods 171

Forecasting logistics needs 172

Selecting the right forecasting technique 172

Using Information to Link a Global Logistics System Together 172

Electronic data interchange (EDI) 172

Impediments to global implementation of EDI procedures 178

Developments in Logistics Information Systems 178

The Internet and electronic commerce 179

Open-systems computer networks 180

Wireless communication 180

Multidimensional bar codes 180

Radio frequency identification (RFID) technology 180

Other advances in communications 182

Chapter Summary 182

Study Questions 183

10 Inbound Logistics and Purchasing 185

Introduction 185

The Growing Importance of Inbound Logistics 186

Inbound Logistics Activities 187

Customer service 187

Transportation 187

Inventory management 187

Warehousing and storage 188

Maintenance 188

Information management 188

Salvage and waste disposal 189

Production 189

Summary 189

Purchasing 190

Goals of purchasing 191

Purchasing tasks 191

Improving purchasing productivity 194

Organize for enhanced productivity 197

Management Techniques for Improving Materials Management 200

Chapter Summary 200

Study Questions 200

11 The Global Logistics Environment 203

Introduction 203

The Global Supply Chain 204

Changing Market Opportunities 205

Emerging nations 205

Multilateral trade organizations 205

Global sourcing 208

Cultural Issues in Logistics 208

Alternative Global Distribution Strategies 209

International Documentation 211

Customs Regulations 212

Foreign Trade Zones 214

Logistics Intermediaries and Facilitators 215

Third-Party Logistics Providers 217

Controlling the Global Logistics System 219

Chapter Summary 220

Study Questions 221

12 Logistics Strategies 224

Introduction 224

Corporate Strategic Planning 225

Formulating Logistics Strategy 226

Integrating the Logistics Channel 230

Implementing Logistics Strategies 232

Centralization of logistics activities versus decentralization 233

Third-party service providers 234

Logistics strategy and improved corporate performance 237

Future Issues That Will Affect Logistics 237

Implications for Logistics Managers 241

Chapter Summary 242

Study Questions 242

13 Developing High-Quality Logistics Systems 245

Introduction 245

Basic Quality Concepts: The Internal Perspective 246

Leadership 247

Cooperation 247

Learning 248

Process management 248

Employee outcomes 248

Organizational performances 248

Basic Quality Concepts: The External View 249

The Service Quality Model 250

Total Quality Management (TQM) in Logistics 253

Developing a Formal Quality Process 254

Quality Process Success Factors for Logistics Management 256

ISO 9001:2000 The International Quality Standard 259

The Cost of Quality 260

Chapter Summary 260

Study Questions 261

14 Improving Logistics Performance 263

Introduction 263

Improving Organizational Performance 264

Continuous and breakthrough improvements 265

Basic Tools for Improving Logistics Performance 266

Process analysis tools 266

Statistical analysis tools 268

Benchmarking 268

Activity-based costing 270

Effecting Meaningful Change 274

Logistics service quality 274

Productivity 275

Process effectiveness 276

Impediments to Improved Logistics Performance 276

Failure to adopt the customer’s viewpoint 276

Lack of requisite cost data 277

Lack of broad-based management skills 278

Failure to think of logistics as a system 278

Need for cultural change within the organization 279

Creating a World-Class Logistics System 279

Chapter Summary 281

Study Questions 282

15 Organizing for Logistics Effectiveness 284

Introduction 284

Overview of Logistics Organizations 285

Building an Effective Logistics Organization 288

Centralization 288

Scope of responsibility/span of control 289

Formalization 289

Integration 289

The Role of Logistics in the Firm 289

Inter-organizational effectiveness 290

Variables Influencing Organizational Structure 291

Organization size 292

Corporate structure 292

Corporate strategy 292

The importance of logistics 293

Corporate information technology 293

Environmental uncertainty 293

Environmental heterogeneity 294

Summary 297

Reconciling Intra- and Inter-Organizational Issues 298

Moving Towards the “Best” Organizational Structure 299

Chapter Summary 299

Study Questions 300

Index 303

Kent N. Gourdin is Director of the Global Logistics and Transportation Program in the School of Business and Economics at the College of Charleston. He also holds the Henry Tecklenburg Chair in Intermodal Transportation. As the globalization of trade gathers momentum, competition is becoming progressively more fierce and opportunities for gaining an edge over competitors are increasingly difficult to realize. Global Logistics Management: A Competitive Advantage for the 21st Century investigates the nature of individual logistics activities and demonstrates how they can be interwoven to form integrated systems. It provides both managers and students with the knowledge and skills necessary to turn corporate logistics activities into a source of sustainable competitive advantage.

Written in a clear and straightforward manner, the focus throughout the book is global. Examples of real-world applications of the principles discussed are drawn from organizations in various countries around the world. For the second edition, new cases have been added to reflect recent technological developments and current preoccupations such as security and more effective supply chain management.